A walk thru Chinatown

With my new blog, Singapore Orchids, I have replaced the orchids in this blog with a new series on Chinatown. Orchid lovers and Jaunty can view the orchids in the link to Singapore Orchids. Cheers.

All the way, DBS-Citibank!

Just as I raised my hope for a 7% dividend, it fell flat in my face. And my estimate was way way off. The 7% would have given a return of US$482m pa. GIC could have the money back in no time. Now it is all gone. But don't worry, there is a better and more promising deal. The conversion price which was US$26.35 was watered down to US$3.25 and the conversion to ordinary shares will give GIC an 11% stake in Citibank, the second largest shareholder next to the US govt. And there are more promises along the way. If the market recovers and Citi's price shot up, we could reap much higher returns. If the market plunges and Citi became insolvent or be nationalised, gone with the wind. But the second 'IF' is only a big If. No need to worry about that. In the long term everything will be fine. Now the more juicy part. If our US$6.88b can give us 11% stake in Citibank, it means that the whole bank can be had for no more than US$70b. This is definitely very affordable. Shouldn't GIC launch a general take over of Citibank and merge it with DBS to become an international giant bank? And another piece of good news. There are so many good news and things are looking much rosier. What's that? Oh, Citibank's share price fell to US$1.55. This simply means we could have the bank for less than US$35b. And with already 11% in our hands, US$30b should do the trick. I don't think the US govt will object if we let Chip Goodyear to negotiate the deal. The US govt must be more comfortable with Goodyear in charge. Wow, I think we have all these planned in advance. Great foresight and pro active thinking and decision making. We must have see all these coming. Go for it GIC! Take Citibank under our wings, but make sure the top management are Singaporeans. The Americans can be co opted as advisers. I will definitely bank with DBS Citibank.

Talk, shout, scream, kpkb, beat the dustbin!

Singaporeans must make noise, make all the noise that is necessary when they see something is not right. For if they don't, it will be taken that everything is alright. See, no one complaining. Everything must be fine. If Singaporeans are willing to accept all the nonsense thrown at them, their money kept away from them, take their money from them, and let things happened the way others want it their way, they have only themselves to blame for the shit that are being thrown into their faces. The fate of the people is in their own hands. And they can't say they have no opportunity to make their views and opinions heard. In the past TOM would have the absolute authority to sieve through what they want or do not want to be printed, to be read. Today the internet is there. Just hit the keyboard and out it goes. No one can stop you, except yourself. It is all up to you now. You can only blame yourself if you allow people to abuse you and rob you of your right, your money and your voice. Go, make all the noise that you want and be heard.

7% of hope

Temasek owns 261 million preferred shares of Citibank that pay 7% fixed returns. What does this mean? 7% of what? 7% of the value of the 261 mil worth of shares or 7% of the par value of the shares? If it is the latter, then nothing much to talk about as the amount will come to about US$18m pa, assuming the par value is US$1. Now, if the return is based on the total sum paid for the preferred shares, eg at US$10 each, the return will be a neat US$180m pa. The amount will vary accounting to the share price agreed upon. This is quite likely as the returns must be gauge against who Temasek could get from other fixed income products other than minibonds. Oh, maybe minibond returns are factored in as these bonds were then yielding 4 or 5% returns. Which is which, this has not been explained. 7% of what? The return must be quite sizeable or else Citi will not be attempting to force the conversion of these shares to ordinary shares earning no fixed returns. Is there a 7% of hope?

Right to know or right not to know?

We have heard the huge losses of Temasek's investment, all $58b! Now, don't ever poof poof this as small change. It is a very huge sum of money. What about GIC? How much has it lost? Rumours and speculations are that it has lost more than $100b! Given the $550b portfolio that it was managing then, it is unlikely that it can escape the meltdown with less than 30% loss. Do the citizens have the right to know how much we have lost? Or shall this be kept under veil in the name of secrecy or professional expediency? Is it acceptable not to tell the people how much we have lost? Is this the people's money? If so, can we ask and be told of the real numbers? Or shall we be complacent and just trust that the money is in good hands?

Minibonds and the stock market - Which is more destructive?

We have seen the victims of the minibonds and toxic financial products. Of course no one is responsible for the mess and the loss of millions from our investors. These investors are expected to be smart enough to know what they were doing, and stupid enough to lose all their monies in things they do not know enough. They should count themselves lucky, to be able to point the fault at the products and the agencies selling them, including the ‘irresponsible’ marketeers. I am not sure if it is fair to blame this group of scapegoats. But what these people have lost in the minibonds is nothing compare to the billions lost in the stock market. Blame it on the contagion effect affecting the whole financial world. No one is to be blamed. Really? OK, OK, better not to blame anyone if we want people to listen. Once people think that they are being put on the spot, their guards will be up. In our hurry to build a big stock market after the collapse of CLOB, have we been too quick and too loose in expanding our stockmarket, with all kinds of stocks from China and a little from other emerging countries launching their IPOs here? Now we are seeing how risky they can be without the close quarter monitoring. We are seeing frauds after frauds, with managements running away or accounting irregularities. Have we thrown caution into the winds just to achieve our ambitious plan of expanding at all cost? Then there is the operating system that favours the big boys who can muscle out the small investors by brute force, force selling all the way down, or vice versa. Not only the investors were hurt, corporations also see their stock values hammered to levels beyond recognition, far below their net asset values. Now IPO listing is a stigma that few would even contemplate. No body have faith any more in IPOs and our market. Derivative markets are as good as dead. Before we ask where are we going from here, please ask how much have been lost, or how many billions have been lost. The sad thing is that unlike the minibond fiasco, it is difficult to pin point at one single fault. So there is no avenue to seek redress. Caveat emptor, caveat emptor! Everyone looks like an angel. Yes I can see the halo ring above the heads. Where is the moral responsibility, the public duty, and professional conduct and accountability to ensure that the system is sound and fair to all participants in the market? Are we happy at the way the market is running and at the way money is being lost in the market? Actually the money were not lost. They were being scooped away. It is high time that something be done to stamp the incessant loss of money in the market? Anyone bothers? Anyone responsible? Who cares, the apple still look ravishingly red and sexy outside. All we are hearing is that we have one of the best regulated market in the world. Best in what and to whose benefit? Anyone want to ask the opinion of the small investors? Who is laughing all the way to the bank? And whose bank accounts are being emptied? It is a tragedy! Nothing less. PS. Japan is worried that confidence in their stockmarket and financial system is breaking down and is seeking ways to intervene in the stock market to prime it up. They are preparing billions to buy into the stock market. I think we will do nothing. It is all caveat emptor. We have the best system in the world, and it will run to a halt on its own. Have faith. Trust that the system is in good hands.

We will

We will look after our old, our weak and our sick! We will house them, feed them and care for them! We will return their savings as promised and not suka suka keep it at our pleasure! We will build housing at really affordable price, not market price! We will build hospitals to care for our sick, not at astronomical prices! Hmmmm, I think any potential political party that adopts the above as their party slogan will be seen as too idealistic, not pragmatic. Maybe foolish.

Ouch! it's painful

In January 2008, GIC invested US$6.88b in convertible preferred securities of Citigroup, which at the time would have given it a 4% stake in the bank if converted to common stock. According to a Securities and Exchange Commission filing late last month, GIC now owns a beneficial 5.3% stake, or 303.8m shares, in Citigroup. These include preferred shares that can be converted into 261.1 million common shares. Based on Citi's $1.95 closing price Friday, the stake is worth $592.4 million. The above is an extract from a WSJ article posted in www.littlespeck.com. From US$6.8b to US$592.4, that is less than 10% left. Oooooh, it is so painful.

The enormity of it all

Which is more serious? The escape of an international terrorist who was planning to blow up our airport or the loss of at least $100b of our reserves, or the tax payers' money? Is the selling of the series of minibonds and other toxic products to the public more serious than a stock market beefed up with many dubious stocks or management that we hardly know and accounting systems that are difficult to verify, and a system that allows the big boys to bring the small investors to the cleaners? Both are very serious issues and have very serious implications to the well being of the state and its people. It would be best for the professionals to deal with them in depth than for me to touch on them briefly in an internet forum. Let me deal with the Mas Selamat escape versus the $100b loss. We can look at them from the implications and consequences to come, as well as the lapses and the system to prevent their occurrence. We can also look at the execution and the processes that led to these two incidents. In the Selamat case, we can't imagine how he would hit back and the untold damages and pain that can be inflicted on the people and assets. We can live our lives as if nothing has happened. But wait, if he is around, and should he be successful in what he set out to do before, we will regret deeply for his escape. When it happens, no amount of consolation and remorse can make up for it. No excuses can make up for it. How he escaped and the patching up of the system had been dealt with and hopefully, keeping our fingers crossed, it is not going to happen a second time. And the $100b loss! How long it took to build up this sum of money? How much can it do for the people if we have not lost them? And how long will it take to make back this kind of money? Just think about it. To be fair, some part of the losses are expected given the risk involved in investing. But two points need to relook at. Should so much money be invested in high risk assets? Then the next question is whether some deals were done too hastily, insufficient ground work and effort to understand the risk involved, and could be avoided? And the most silly question to ask is whether we have been too trusting of the Americans? Yes, we lost a lot of money, billions in the last few deals, mostly because of trust. And we put in so much money without even a board representation! What, playing masak masak? Giving away Monopoly Games money? These are huge sums of money that must be carefully handled and managed. The way it was distributed begs for a serious re examination and introspection into our mentality, policies and decision making in these areas. Trust and too trusting will get us only into deep shit. Would there be serious indept analyses of these incidents by the professionals and academics, or would they find them too hot to handle? I will touch on the toxic products and stock market separately.

Cyberspace the next battle ground

From what Hsien Loong had said, cyberspace will be the new battle ground for the next general election. The PAP has been preparing for it and the younger members are being encouraged to play a more active role to lead the charge. He has forgotten that Lim Swee Say will be a more popular blogger if he has his own blog. He has a lot of interesting and captivating stories to attract hoards of bloggers. The new media or cyberspace can no longer be ignored as the backwater that was hardly treaded. Over the last few years it has gained tremendous ground and eating into the readership of the old media. People are looking for alternative views instead of the stead and predictable comments of TOM. And with the flowery and unrestrained lingo used, it is an act that is hard to beat. We will see a battle for readership between the new and old media, one that is more critical and cynical against one that is pro govt and singing praises. Or as Hsien Loong said, the traditional or old media will 'present trusted, unbiased and informed opinions' though a bit tame. On the other corner (I said) will be the untrusted, biased and less informed opinions of the new media, but sexy and attractive. And don't forget the power of podcast and pictures. The presentation of the most beautiful angle or the ugliest angle can make or break a candidate. Imagine one getting caught on video or photos in the most compromising position, I mean like digging the nose. Pictures can tell a very distorted story. An ugly or hostile face will be a put off immediately. Now this is not going to be the protected turf of TOM any more. Both can print whatever they like, selectively, and definitely biased. Oops, TOM's pictures will be unbiased. Only the pictures of new media will be biased. Interesting scenarios coming up. I doubt TOM will be anything given its slow printing schedule.

Notable quote by Hsien Loong

'On a long term basis, overall, the way the Govt has managed the money, we haven't done badly.' Lee Hsien Loong I disagree. We have managed our money well until we started the shopping spree. And the last few deals to buy the banks, were at best, good intention but poor execution. Losing $100b can never be called 'haven't done badly.'

The end of the Shopping Spree

It was great fun going on a shopping spree with a container of cash. Better still when it is other people's money. Take all the credits and big bonuses if it turns out right, and if not, well, so be it. Buying the world is not as simple as it turns out to be. When everyone plays by the rule, proper trading practices, it should not go too far wrong. Unfortunately the world is infested with thieves and conmen of all disguises. Now we have came home with a basket of rotten eggs. And the rotten eggs will not become fresh any more. Caveat Emptor! Would it be easier and safer to invest at home? Here every element is under our control and supervision. The entities are known and can't go too far wrong. But we have neglected our own local companies and the stock market. They have been ruined. Big funds were allowed a free hand and free play to destroy the values of our stocks and emptying the pockets of our small investors by sheer muscles. It is time that we look inward, use our own funds and take on these big funds, save our market, the stock value of our companies, and the small investors. With $1b and the connections, it is so easy, yes, so easy to lick the big funds and make them pay for their waywardness and destruction of our wealth, the wealth of corporations and individuals. Overseas shopping spree is over. Time to help ourselves and save ourselves with our own money. No more dumping in unknown land, unknown companies and management, and ended with baskets of rotten eggs. Play in a pool that we know well. We have comparative advantages.

Licensing of bicycles

I read that this important issue was raised in Parliament. And there is a case for licensing bicycles and the problem is only about how ugly and big the licence plate will be. I am not sure if the issue of moderation or self regulation in cyberspace was also raised after the comments by Lui Tuck Yew. The last few days were all about whether a snap election will be called. Seriously, do we have time for all these? Shouldn't people be cracking their golden brains, planning and scheming on how to get back the billions that we have lost? Come on, this is the hottest issue not only in cyberspace but kopitiams as well. The comments in kopitiams were no less wild, pointed and vulgar than those in cyberspace. Now I am allowing my imagination to go a little while after a breakfast of plain porridge and black soya source. I tried that to relive the memories of the 50s and 60s when this was the staple food for many. And they didn't have that for breakfast, but as their main meals, lunch and dinner. It tasted quite plain actually. Should I go for Ah Koon's breakfast set? I digressed. More signboards are coming up in kopitiams and hawker stalls. Self regulations when commenting on social and political issues. No vulgarities. Not tantrums. 'KNN, why got so many signs ah! Kong si mi?' I turn around to see a few Ah Peks pointing at the signs using their middle fingers. On another corner a few Ah Peks were in serious discussion to form a committee and to set up rules and regulations on what are acceptable or unacceptable comments and lingos. A code of conduct is also being drafted up. One even suggested wearing T shirts with logos to tell the other Ah Peks who they are, Kopitiam Moderators.

The 2 cent debate

Singaporeans were all high and excited debating about the 2c savings that the PTC had granted them during this financial crisis. There were excitements everywhere, in the old media as well as cyberspace. The professionals went to town literally, interviewing the grateful commuters for the savings that would have brought them some relief and easier on their pockets. The PTC must have spent many hours debating among themselves on this big decision before agreeing to the reduction. I remember the MYCD took a year to study before increasing the public assistance grant from $360 to $390. And the President took 11 days to approve a $4.9b withdrawal from the national reserves. I wonder if the PTC needed to agonise over this 2c reduction? But all these cannot beat the 2c debate and the expectations of compliments from the grateful commuters. Would the media would be conducting straw polls and interviews on the street on issues like the $58b loss from our investment of public fund, with more losses waiting to be announced? I don't remember any such exuberance when the news broke out. It is kind of a sad that people should all be excited over 2c. What kind of existence is that, worrying about 2c everyday? They will probably hit a state of delirium when their salary is raised by another million dollars. Just sharing my 2 cent's worth.

Burning rage of taxi drivers

The media interviewed a few taxi drivers last night and you can tell that they were very unhappy with the lower ridership and lower income. They complained to the media that taxi fares must come down when the fares of trains and buses are coming down. They are losing more passengers in this hard time to trains and buses. It hurts their income for sure. But they could not reduce their fares as the rentals for the taxis are still high and eating into their income. Wait a minute, in an earlier post I quoted a media report that several small taxi operators wanted to reduce the taxi fares. Oh, now I see. Lowering fares without lowering operating cost and rentals of taxis will not do. It will mean high cost low income. What about the views of big taxi operators? They are for high fares. Lowering of fares will reduce the income of taxi drivers. True, true, I agree. No doubt about it. But can they reduce the taxi rentals? Now, that is a very difficult question. No, they are not considering it. They are thinking of other ways of promoting taxi rides like talking to corporations and giving discount vouchers to encourage ridership. Discount vouchers? Discount from whose income, taxi operators or drivers? My question is, why waste all the money and effort to promote to a small group of users? If, I say if, the discount is from the taxi operators, why not simply lower the rental and its equivalent in fares? Why not? They must have good reasons to do so. In the meantime the taxi drivers can continue to fester in their burning rage. Please don't burn anyone, please. Maybe this is why taxi drivers are prone to start fires.

SMRT and buses cut fares

The Public Transport Council(PTC) is showing its caring side by announcing a reduction in SMRT fares ranging from 2c to 18c or a bit more for those who need to transfer from bus to train and vice versa. The more the commuters do their transferring acts, the greater will be their savings. The transport operators will be transferring the savings from govt subsidies to the commuters. I was worried for them for a while when I thought they would have trouble explaining to their shareholders for the loss in profits with the reduction. SMRT claimed that it would have to fork out another $30m to $40m even with the govt subsidies. Would they be incurring a loss then? Maybe not with oil prices coming down rapidly to almost its previous level and with the big increase in ridership. My prediction is that SMRT will chalk up even bigger profits next year. Good for them. Let me compute how much savings will I get before I pop that bottle of champagne. 2c a trip, 2 trips a day and 22 trips a month. Viola, I save 88c! So I will be able to go for that additional cup of kopi in the hawker stall. Not bad. My cost of living is coming down. For those taking buses, the savings could be 20c or more per trip. Very good. Maybe I shall take buses instead and save more. Better still, take bus, train, bus combination, maybe I can save enough for two plates of chicken rice. Great idea.

Second key tested!

Chua Mui Hoong in her article today in the ST is all praise for the second key system. It has been tested and it works. It works so smoothly like a well oiled machinery. Everything goes without a single hitch. The system has been perfected over time. What if the President said no? Or what if the Presidential Council said no? These are highly unlikely scenarios. But let's say if it happens, what's next? The request to dip into the reserves goes back to Parliament for another debate, repackage and re submit to the President? Could there be a provision somewhere that after 3 rejections by the President the request should automatically be passed in Parliament? Or would there be a vote of no confidence on the President and a new elected President be elected? Or would the govt just accept it and say can't do anything to help the people because the President said no and no money available? Has this part been tested? How smooth will it be?

Time for a one party dictatorship

We are in a major crisis. We cannot afford to have a weak govt. We cannot afford to have all the politikings going around and sapping away the energy of the govt. We need continuity so that the govt can plan ahead to overcome this crisis. All the conditions are ripe for a single party govt to manage the country over the long haul. A combative democratic process is unhealthy. We have lost probably $100b or more of our reserves. And we don't even know how much is our reserves or how much we have lost. Someone told me not to worry, we have much more in reserves than officially announced. Actually it is frightening if losing $100b is seen as nothing. We need really able men and women to make sure that our reserves keep growing and being protected. And if we are to have able people managing them, a one party dictatorship is the way to go. Through our experience many good men and women would not want to be involved in the rough and tussle of running for election. A single party dictatorship will give the govt full authority to appoint the good men to office, something like the American president appointing his cabinet. There were signs of an election coming with the electoral list being updated. The media reported that there were no new faces doing the walkabout, indicating that the team will stay put. This could be a possibility. How about the possibility of an election for a dictatorship or a single party rule? Like I said above, a dictatorship or single party rule has the flexibility for the power to appoint the office bearers. No neeed new faces to walk about and be recognised or to learn the rope of garnering grassroot support. Is it possible? But this is not the issue. The main issue now is for a sustainable govt to be in place for a long time to overcome this crisis. The people must close rank and support the govt, stay together and cut down on all the bickering and allow the govt to do its job. Maybe 10 years, 20 or 30 years, we shall overcome.

Notable quote by Ong Teng Cheong

“My loyalty is first and foremost, to the people of Singapore. It has always been so, and will always remain so.” Ong Teng Cheong, First Elected President.

Time to face the crisis squarely

All the ifs and buts and maybes must be put aside. We are facing a crisis. There is no where to hide. The country is facing a crisis. The people are also facing a crisis. It is time the man himself calls for a TV conference and talk to the nation. I would expect the man to say, look people, we are in difficult times. The whole world is also in difficult times, and we are not alone. Yes, we have been hit. Some of our investments have gone sour. Here are the numbers. We have so much and we have lost so much. Period. Now we need to go forward together in this crisis. We are family. We will face this crisis head on, squarely. We will do everything we can, for the country and for the people. Let's stand united, lock arms, as one people, one nation. We shall overcome. Thank you and have a good nite sleep. It is not the end of the world.